Flour Mills of Nigeria Plc

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Flour Mills of Nigeria Plc (2021-11)
  • Flour Mills of Nigeria Plc
  • Year : Nov 2021
3 Tokens
USD 300.00

GCR considers FMN to be moderately geared. Despite the spike in gross debt by N26.5bn to c.N150bn at FY21, net debt to EBITDA moderated to 1.3x (FY20: 1.8x) on the back of higher quantum of earnings and substantial cash holding. GCR anticipates that debt will remain at a moderate level in FY22-23, with further repayments and higher earnings expected to drive further moderation in the leverage metrics to around 90%-120% band. Net interest coverage also strengthened to 6x in FY21 (review average: 3.1x) on the back of improved earnings and a better priced debt book and is expected to be sustained at the 4x-5x range in the medium term

Additional Information

The Stable Outlook reflects GCR’s view that FMN will maintain a strong market share, which will support stronger revenue growth and stable earnings, underpin further moderation in the leverage position over the medium term. GCR has adopted a group analytical approach to the ratings accorded to FMN, as the Company is operationally critical to the wider group; owns, consolidates, and facilitates credit facilities on behalf of its subsidiaries, which implies the potential for tangible risk transfers into the rated entity. Should there be material changes to this position, GCR will reconsider the approach.

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